Reference Points

Reference points are benchmarks or standards that individuals use to evaluate situations, decisions, or options. They are mental benchmarks formed through experience, expectations, or social norms, helping us judge whether something is good or bad, better or worse. For example, if you usually buy a certain brand of coffee for $5, that price becomes your reference point; paying more might seem expensive, while paying less seems like a good deal. Reference points shape our perceptions and choices by providing a familiar context to interpret new information or experiences.